Will your children pick up the debt?

In Japan when people die, their children inherit their debts. There is a three-month period after the death, according to the Japanese Embassy, in which the children can walk away from these liabilities - but, if they do so, they also have to wave goodbye to any assets.

In Britain, our view of family often obliges us to pay off the debts of children - but it rarely covers the parents. Nevertheless, we have our counterpart to the Japanese phenomenon of rising debt among pensioners. Just look at what is happening in the property sector. Soaring house prices mean that first-time buyers are getting older - pushing the period in which we have debts back later into our lives. It used to be that large numbers of 20-somethings bought houses - but the average first-time buyer is now 34, according to the Council of Mortgage Lenders - and Richard Donnell of estate agent Savills believes the age will rise to 35 or 36. If a 35-year-old takes out a standard term 25-year mortgage, he or she will be within shouting distance of retirement age when the loan comes to an end.

Since October - when the Financial Services Authority began regulating mortgages - lenders and mortgage advisers have been under pressure to justify making loans to the middle-aged. If they applied this strictly, they would be highly circumspect about giving 25-year loans to anyone above 40 (since borrowers would then be above the state retirement age of 65 when the loan ended).

In practice, lenders are more broad-minded. Halifax, for instance, our largest lender, has sent a memo to mortgage advisers alerting them to look for evidence of post-retirement income when lending to people above 58 or in cases where the loan period ends after the borrower's 70th birthday.

In reality, lending to people in their 40s, 50s and above will probably accelerate. Anti-age discrimination laws due to apply in the workplace from October 2006 could be extended outside employment, says solicitor James Davies of Lewis Silkin who is an expert in this field. 'In 10 years, I would not be at all surprised if the provision of goods and services was covered by age discrimination laws,' he says.

Even if we do not formally introduce the Japanese solution here, we will find our own ways of dealing with the problem. More children will subsidise their parents' care in homes. More parents will die without leaving assets - as they opt for equity release. More money will be transferred from those who do leave assets to the government in the form of Inheritance Tax.

And maybe some lenders will require older borrowers to have guarantors (their children?) if they cannot prove their future income.